Making ‘Make in India’ a reality

During U.S. trip, Prime Minister Narendra Modi’s important
outreach was to American business. This was part of his "Make in
India" drive, which he lunched in a high-profile event a day
before he embarked on his U.S. trip. He wrote in the Wall Street Journal: “Make
in India is our commitment — and an invitation to all — to turn India into a
new global manufacturing hub. We will do what it takes to make it a reality.” Also,
it was a message occupying front and centre when he met both Japan's Shinzo Abe
and China's Xi Jinping. India’s
prime minister is known for his pro-business policies, and his steady efforts
to draw foreign investments could plant the seeds for a more prosperous India.

But
there are some major problems standing in the way of making India an attractive
investor destination that can not be solved overnight. There is a long list of infrastructure
problems: patchy electricity, lack of roads, inadequate port facilities. Further, cumbersome
labor regulations are among the biggest hurdles to setting up manufacturing in
India, which fell to 134th place this year in a World Bank index of countries
for doing business. Moreover, land for factories is often
impossible to acquire at any price. Another problem is that India’s labor
force is skewed toward the agriculture sector, even though its highest groth industries like information
technology, telecom, healthcare, and retail are projected to require millions
of new skilled workers which they may not be able to find due to poor quality
of education.There is another major problem
that is red tapism and the culture of babugiri that it has engendered.[1]

In short, India is ranked as one of the worst countries
of the world in which to do business. PM Modi is already in the process to create
investor friendly environment. “For the
success of ‘Make in India,’ ease of doing business should be given priority,”
said PM Modi, while inaugurating ‘Shramev Jayate
Karyakram'. He announced labor reforms at this occasion, simplifying
employment rules and aiming to give a lift to manufacturing and job creation.
At the same time, he announced a program for skills development, in which the
Labor Ministry will finance the first two years of training for apprentices in
manufacturing units. Also, sincehe
took office in May,
Modi has begun to execute on the systematic reformation of India’s inefficient
and bureaucratic markets to make them friendlier and more open for investors
and businesses.Lots of other measures are under active consideration; and things will be much clearer by
next budget. I believe GST will be in place by then, some labor reforms will
take place and some important pressing issues like environmental clearance and
land acquisition bill will be sorted out as soon as possible.

No doubt, such relatively
straightforward steps could make a powerful difference, raising the Indian
growth rate by two or even three percentage points from its current 4-5% but
not create sustainable environment for ‘Make in India’ to
succeed. The Modi government could be wrong
in simply believing that the big investments by the American, Chinese and Japanese
among others will solve all the problems of India. Some experts are saying that
‘make in India’ is more of hype than substance.

Theeconomic liberalization in India started
in 1991 of the country's economic policies, with goal of making the economy
more market-oriented and expanding the role of the private and foreign
investment. As a result, a decade ago India’s economy
was winning new-found respect as a riot of energy and enterprise, but its
performance in recent years has been dismal. Now foreign bosses roll their eyes
when you mention India, as they did in the 1980s. Growth has fallen to 5%, half
the level at the peak of the 2004-08 boom. Inflation and public borrowing are
too high. The rupee slumped all the time low in 2013. Private firms are fed up
with red tape and graft and have cut investment from a peak of 17% of GDP to
9%. On some measures the country is going backwards in time. In a country that
should be industrializing, the contribution to GDP from industry has been
declining while manufacturing jobs have stagnated.

Now question arises: Why
India could not reap the fruits of economic liberalization? There may be several
reasons behind this sorry state of affairs, but I think that efforts
made over the last two decadesto
improve the economy have mainly been neutralized by the rapid growth of
population. The economic reforms completed 20 years in July, 2011, however,
during this period, India’s population increased by 365 million, much more than
the total population of USA - the third most populous country in the world; and
it is still growing by around 17 to 18 million every year. One has
to recognize that population is an important factor in sustainable development,
especially when it is growing seemingly out of control since it leads to a
significant diversion of national investable resources to consumption which
could otherwise be used for increasing investment and productivity and for
improving the quality of public services such as education, health, sanitation,
provision of safe drinking water, etc

With 1.27 billion people and still growing, India is getting dangerously overcrowded. India is currently the second most
populous nation in the world. It will surpass China as the most populous within
5-7 years. India's population is projected to
peak at 1.7 billion in 2060. China at its peak in 2025 will have 1.4 billion
people. In fact, when China peaks, India will have already surpassed it in
population. Many Indians including policy makers see these
emerging demographics as a critical advantage in competition with the nation it
regards as its chief rival –
China. Another
popularly held belief by India’s policy makers and experts is that as a country
becomes economically more prosperous, its fertility declines significantly and
leads to a stable population. However, this is a simplistic view of a complex
phenomenon.[2]

Current population growth is mainly
fuelled by unwanted fertility. More than four in ten pregnancies are
unintended/unplanned or simply unwanted by the women who experience them and
half or more of these pregnancies result in births that spur continued
population growth. More than 26 million
children are born in India every year and out of this about 6 million births
have been classified as unplanned/unintended or simply unwanted. Based on findings of the National
Family Health Surveys 1, 2 and 3, it is estimated that currently there are
around 460 million people out of 1270 million in India who are product of
unwanted pregnancies, and most of them are from the lower economic strata. [3] The consequences of unwanted pregnancy are
serious, slowing down the process of socio-economic development. It is because
unwanted childbearing results in poor physical growth, reduced school
performance, diminished concentration
in daily tasks thus impacting work capacity and work output resulting in
diminished earning capacity. The impact of unwanted childbearing is reflected
in widespread hunger, poverty, unemployment as well as increasing scarcity of
basic resources like food, water and space in several parts of India despite
concerted developmental efforts since 1991.

There may be several reasons behind unwanted childbearing, but most
important one is related to the imperfect control over the reproductive
process. While India’s population
continues to grow by 17-18 million annually, 15 million married women, mostly from Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh
, seek to postpone childbearing, space births, or stop having children, but are
not using modern contraception. Often, these women travel far from their
communities to reach a health facility, only to return home “empty handed” due
to shortages, stock outs, lack of options, and/or non availability of doctors
and paramedical staff. So letting
women have the means to manage their childbearing will help to make India a
more stable, equal and vibrant place. When women have access to contraception
appropriate to their needs, desires, and budgets, the potential benefits are
many, including reduced maternal and child mortality as well as lesser number
of abortions and unwanted pregnancies. In addition to its health benefits,
family planning allows families and communities to invest more in education and
health care and helps reduce poverty, as argued by the President of Population
Council, Peter J. Donaldson.

Here, children by choice not by chance are the only way poor can aspire a better life
and good health. For this, direct efforts aimed
at decreasing the rate of natural increase of population should be intensified
through greater access to suitable voluntary reproductive health services,
information, and education and of acceptable methods of family regulations ( see: Kothari, Devendra and Sudha Tewari. 2009.
“Slowing Population Growth in India: Challenges, Opportunities and the Way
Forward”. MIPD Policy Brief No.2,
Management Institute of Population and Development, a unit of Parivar Seva
Sanstha, New Delhi.). Also, fertility reduction efforts, beyond family planning, should become
an integral part of the planning for human development, and should aim at
improving quality of life of the family and the status of women.[4]

Food for
thought:

Over the past half
century most East Asian countries have prospered by focusing on the
reproductive health including population stabilization and education (Table 1). The replacement
level fertilityof
2.1 children per woman, required to initiate the process of population
stabilization, has already been achieved by Thailand (1.5), China (1.6), Brazil
(1.7) and even Islamic country Iran (1.9), as shown in Table 1. Indonesia, another Muslim dominating country
is going to attain it within couple of years; However, India will not achieve
this level before 2035, as per the UN Population Division. In the last forty
years, the total fertility in China declined from 6 children per woman in 1970
to 1.6 in 2010, whereas the rate of decline was much slow in India in the
corresponding period (Table 1).[5]On an average, a woman in India produces 2.7 children
during her lifetime and more than thirty percent of it could be classified as
unwanted fertility.[6] The replacement level fertility of
2.1 children per woman, required to initiate the process of population
stabilization, has already been achieved by Thailand (1.5), China (1.6), Brazil
(1.7) and even Islamic country Iran (1.9), as shown in Table 1. Indonesia, another Muslim dominating country
is going to attain it within couple of years; However, India will not achieve
this level before 2035, as per the UN Population Division.

The most important change in the world over the past 40
years has been the rise of China. The increase in its average annual GDP per
head from around $300 to $6,750 over the period has not just brought previously
unimagined prosperity to hundreds of millions of people, but has also remade
the world economy and geopolitics. India’s GDP per head was the same as China’s
four decades ago. It is now less than a quarter of the size. Despite a couple
of bouts of reform and spurts of growth, India’s economy has never achieved the
momentum that has dragged China out of poverty. The human cost, in terms of
frustrated, underemployed, ill-educated, unhealthy, hungry people, has been immense.
In fact, PM Modi is interested in copying China’s development agenda.He came to power promising manufacturing
jobs, high-speed trains and ‘smart’ cities. Hope India will learn from the East
Asian countries, especially China that the reduced population growth rate and quality
of education helps in achieving sustainable and faster development.

The country stands on the threshold of becoming a powerful
regional, if not world, power. For this to happen, India's politicians will
need the political gumption to initiate a bold population policy.Now, for the
first time ever, India has a strong government whose priority is growth and at
the same time most of the people including Muslims do not want more children (See article by the author
- Growing Population in India and Islam: Some Facts - at http://kotharionindia.blogspot.in/2011/09/growing-population-in-india-and-islam.html). The
Modi government’s most important immediate task is to initiate the process
of population stabilization by providing services in un-served and underserved areas
by realigning the capacity of health system to deliver quality care to suit the
needs of clients. This would bring economic as well as governance
benefits. A
radical revamps of family planning program is the only way to do justice to the
politics of aspiration that is ‘Make in India’.

[1]See: Jug Suraiya, Red tape carpet: For ‘Make in India’ to succeed, Modi needs
to end babugiri at
http://blogs.timesofindia.indiatimes.com/jugglebandhi/red-tape-carpet/

[5]For example, in the late seventies, it was quickly realized
by the policy makers of China that with half of the population under the age of
21, further growth was inevitable even if each family was quite small. Some
drastic measures are needed. The “One Child Policy” backed by quality Family
planning services was the answer to that
concern and the Chinese leader Deng Xiaoping announced it in 1979 to limit
China’s population growth. Such interventions were also adopted in India during
seventies. Sanjay Gandhi, a member of the Nehru-Gandhi dynasty,
publicly initiated a widespread compulsory
sterilization programme to limit population growth. Journalist Vinod Mehta in his
1978 book - The Sajay Story - states that the sterilization programmes were initiated
at the behest of the IMF and
the World Bank. But India could not
continue with the program.

[6] As per National
Family Health survey-3, over all, the total wanted fertility rate of 1.9
children per woman is lower by 0.8 child (that is by 30 percent) than the total
Fertility rate of 2.7. This means that if unwanted baths could be eliminated,
the Total Fertility Rate would drop to below the replacement level of fertility
(1.9 children per woman).

1 comment:

The article lays a lot of emphasis on stabilizing population like china, for any and everything to succeed. There appears to be no linkage between "Make in India" campaign and population stabilization, both of which are independent of each other. Too much has been made of China story but we do need to ask ourselves: Do we want to become another China- no freedom expression, no place for expressing difference of opinions and living in a regimented society. The effects of over industrialization without addressing environment concerns has made some parts of china the most polluted and hence the most unliveable. What about major part of China ( not in the south along the sea coast). I think only thing required is to free India from red tape and making it extremely easy for anyone to do business here.